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UNITED STATES v. HUNTON & WILLIAMS

January 3, 1997

UNITED STATES OF AMERICA AND JOHN ADAIR, INSPECTOR GENERAL OF THE RESOLUTION TRUST CORPORATION, Petitioners,
v.
HUNTON & WILLIAMS, Respondent.



The opinion of the court was delivered by: URBINA

 Granting Petitioners' Motion to Enforce the Subpoena Duces Tecum and Ordering the Parties to Enter Into a Confidentiality Agreement

 I. Introduction

 This matter comes before the court upon the United States' and the Office of the Inspector General of the Resolution Trust Corporation's (OIG-RTC) motion to enforce a subpoena duces tecum. *fn1" The RTC retained Hunton & Williams (H&W), a private law firm, to provide it with legal services on a number of matters relating to the management of several failed savings and loans (S&L) institutions. The subpoena seeks the production of information pertaining to conflict of interest searches conducted by H&W including, inter alia, a client list for all H&W attorneys who performed RTC-related work, or in the alternative, the timesheets, with client names redacted, relating to the 40 invoices H&W submitted to the RTC as part of the OIG-RTC's audit, prior to H&W accepting to represent the RTC on a number of matters.

 After having considering the parties' submissions and the relevant law, the court concludes that the subpoena, as narrowed, shall be enforced. Specifically, the court concludes that: the OIG-RTC had the authority to issue the subpoena; the information sought by the subpoena is reasonably relevant to the Inspector General's audit of H&W; and finally, that compliance with the subpoena is not unduly burdensome to H&W. Nevertheless, H&W has raised legitimate privacy and confidentiality concerns with respect to the representation of its clients. The parties shall therefore enter into a confidentiality agreement.

 II. Background

 Petitioners are the United States of America and the OIG-RTC. Congress created the RTC in response to the S&L crisis of the 1980's. The RTC is the product of the Financial Institutions Reform and Recovery Act of 1989 (FIRREA), Pub. L. 101-73, 103-Stat. 1983, which is an amendment to the Federal Home Loan Bank Act (FHLBA). The primary mission of the RTC was to manage and resolve the financial problems of the failed S&L institutions for which conservators or receivers had been appointed beginning January 1, 1989. FIRREA, § 501(a), Pub. L. 101-73, 103 Stat. 183, 369 (codified as 12 U.S.C. § 1441a (b)(3)(A)(1) (Supp. V 1993)). *fn2" Pursuant to the Inspector General Act of 1978, Congress established the OIG-RTC as part of the RTC's administrative structure. 5 U.S.C. App. 3 §§ 11(1) and (2) (Supp. V. 1993). On December 31, 1995, the RTC's term expired and the majority of its assets, personnel and operations, including those of the OIG-RTC, were transferred to the Federal Deposit Insurance Corporation (FDIC).

 The Respondent, H&W, is a private law partnership based in Richmond, Virginia, with a Washington, D.C. office located at 2000 Pennsylvania Avenue, N.W., 9th Floor, Washington, D.C. H&W provided a variety of legal services to the RTC from 1990 to 1995.

 A. The OIG-RTC's Audit of Hunton & Williams

 Under FIRREA, the RTC was authorized to hire outside contractors, such as private law firms, to assist it in carrying out its duties. 12 U.S.C. § 1441a(b)(11)(A). Beginning in 1990, the RTC retained H&W to provide it with legal services on a number of matters relating to the management of several failed S&L institutions. As of July 1995, H&W has been paid over $ 2.9 million for such services. *fn3"

 On March 7, 1994, H&W was informed, by letter, that it had been selected for an audit by the OIG-RTC to determine whether the services it rendered to the RTC between 1991 and 1993 and the costs it charged to the RTC and the FDIC with respect to those services were "reasonable, adequately supported, and within the terms of applicable policies, regulations and agreements." *fn4"

 The audit was initiated in accordance with a program established by the OIG to review all legal fees and expenses billed to the RTC by outside law firms in order to prevent fraud and abuse. Id. *fn5" A central component of the program is for the RTC to review each firm's conflict of interest policies and the application of such policies to the representation of the RTC. *fn6" The OIG must determine whether: (a) the firm maintained and operated a system to identify actual or potential conflicts of interest; (b) the firm informed the RTC (or the FDIC) of any actual or potential conflict; (c) the firm obtained a waiver from the RTC or the FDIC regarding any conflict or whether it withdrew its representation of the client causing the conflict; and finally, (d) the firm obtained a conditional waiver and complied with the conditions of the conditional waiver. Id.

 In May 1994, the H&W partner in charge of RTC matters, Mr. Jack Molenkamp, met with independent auditors under contract with the OIG-RTC and their sub-contract attorney, Mr. Greg Garvin. During this meeting, Mr. Molenkamp provided Mr. Garvin with copies of the firm's conflict policy and conflict forms as well as other information regarding the conflict surveys that were performed in 1991.

 In June of 1994, Mr. Garvin asked to review the original source material that supported the conflict reports, including copies of the attorney responses to the firm survey data and the data from the computer conflicts search. Id.7 Although Mr. Molenkamp allowed Mr. Garvin to interview the paralegal responsible for conflicts searches, Ms. Judy Bugay, he refused to provide him with the original source material on the grounds that it contained confidential ...


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